CANBERRA, Australia (AP) — Australia plans to raise up to $117 billion from sales of state assets, the finance minister said Thursday, as the government tries to bridge a gaping budget deficit.
The announcement comes after the International Monetary Fund highlighted the challenge Australia faces to return its budget to surplus in the aftermath of the global financial crisis. The task has been made harder by tax revenue falling short of expectations as a mining boom cooled.
The federal budget is headed for a 47 billion Australian dollars ($42 billion) deficit in the current fiscal year that ends June 30. Gross debt will peak at AU$667 billion, according to the latest government projections.
Finance Minister Mathias Cormann was not specific on what assets were being considered for sale, aside from his government's plan to sell health insurer Medibank Private, which is estimated to be worth up to AU$4 billion.
Treasurer Joe Hockey, who chairs a meeting of Group of 20 finance ministers in Sydney this month, will likely reveal more of his privatization plans when he delivers his conservative coalition government's first annual budget to Parliament on May 13. He is developing the asset sale plans in conjunction with state governments.
The conservative coalition took office after winning elections last September after five years in opposition. "There is opportunity for both the federal government and state and territory governments to recycle capital by selling infrastructure which appropriately can be sold and then reinvest the capital," Cormann told Australian Broadcasting Corp. radio. He said assets sales would boost economic growth and create jobs.
Cormann said AU$130 billion ($117 billion) "is the potential" amount of money that could be raised. Analysts at ANZ said the greatest beneficiaries would likely be the New South Wales and Queensland state governments, which own the majority of public assets.
The IMF warned the federal government that it would have to make "sizeable cuts" in projected spending if it is to return the budget to an enduring surplus. "We are very conscious of the challenge in front of us. The Treasurer and I are very focused on turning the situation around that we've inherited," Cormann said.